WNIN wins court battle over funding for environmental cleanup

EVANSVILLE, Ind. — A mysterious company holding insurance policies that could pay for cleaning up a contaminated Downtown Evansville dry cleaning site is being court-ordered to maintain the policies.

The insurance at issue was taken out by Pearl Cleaners over decades in business at 414-432 Market St. The policies could pay for an ongoing cleanup at the site and neighboring property historic Carpenter Home owned by WNIN public broadcasting.

WNIN filed a lawsuit in Vanderburgh County Superior Court in August after learning Pearl Cleaners was ceasing business and seeking to transfer assets, including the Downtown property, to new owners. The lawsuit sought a "pre-judgment attachment" — a court order preventing anything from happening to the insurance policies without WNIN's consent before the lawsuit is settled.

Michael Schopmeyer, an attorney from the Kahn, Dees, Donovan & Kahn law firm representing WNIN, said it wasn't until shortly before a Dec. 6 hearing that WNIN was informed Pearl had assigned ownership of the policies to Red Ink Management, LLC in 2016.

Judge Richard D'Amour granted the order on Wednesday. He wrote that the transfer of the insurance policies met nearly all the legal requirements for determining the transfer was fraudulent.

He wrote that Red Ink failed to show proof that the insurance policies were ever transferred. According to the court order, Red Ink's attorney said that in return for receiving the insurance policies, the LLC would insure Pearl up to the limit of the policy.

However, D'Amour wrote that Pearl was already covered by that amount in the insurance policy.

"Normally, when a business is embroiled in litigation, the last thing that business would want to do is sell, assign or liquidate insurance policies which would provide indemnification against said lawsuit," D'Amour wrote.

Later in the court order, D'Amour wrote: "...Pearl decided to come into the hearing playing 'hide the ball,' unable or unwilling to articulate a legitimate business purpose for the purported assignment and never offering into evidence a copy of any contract or agreement between Pearl and Red Ink effectuating the purported 2016 assignment."

Because the "LLC" in Red Ink's name means it is a limited liability company, its owners are protected from personal liability for business debts. In essence, Red Ink might be able to settle cleanup claims with the insurance company and then profit by doing the cleanup.

But if the LLC were to file bankruptcy before the cleanup is done, it could leave the Pearl and WNIN properties "orphaned sites" to be cleaned up at taxpayer expense, Schopmeyer said.

According to the Indiana Secretary of State's Office, Red Ink Management, LLC was created in 2015 and maintains an office in Indianapolis. It's registered agent, or representative, is not a person but another Indianapolis-area limited liability company, Einterz Management, LLC.

On Thursday, Justin Gifford, the lawyer who represented Red Ink and Pearl in the court hearing, declined to comment until he had an opportunity to "speak with my client."

Environmental cleanup liability is a major stumbling block for redeveloping abandoned industrial sites such as Miller Plating on the city's north side, whose owner abandoned it and left the state after abruptly closing in 2007.

"These policies are what allows a Rust Belt state like Indiana to be redeveloped. We don't need taxpayers paying for this. There are probably millions of dollars of private insurance money available," Schopmeyer said. "This keeps policies from being liquidated and funds not being used as they should be for redevelopment."

Unlike Miller Plating and other orphaned sites, Schopmeyer noted that Pearl Cleaners and WNIN properties are in prime location for redevelopment coming off of the Lloyd Expressway into Downtown.

The public broadcasting station has moved to the former WEVV studio at Main Street and Riverside Drive. Schopmeyer said environmental cleanup of the Carpenter Street site is an important factor in WNIN's ability to eventually sell the Carpenter Street property.

WNIN has a pending claim with Pearl's insurer for cleanup on its portion of the site.

"If we had not proceeded (with the lawsuit) we could have ended up in a Miller Plating situation in an entryway to our city," Schopmeyer said.

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Earlier this year, Pearl Cleaners closed its century-old Downtown Evansville location, amid litigation by neighboring public broadcaster WNIN, which says it is owed a reimbursement of environmental contamination costs.
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